Infrastructure and Intergenerational Theft

Written by Henry L. Chambers, Jr. on April 1st, 2009

Some folks seems surprised that the stimulus package, its infrastructure spending and the high deficits that will come along withtmpphpw7mhrv1.jpg them will eventually lead to higher taxes.  Folks ought to be surprised if the spending does not lead to higher taxes.  Indeed, folks ought to hope that the spending does lead to higher taxes as a reminder of who is being aided by much of the spending.  Infrastructure spending is necessary to guarantee that the America we give to the next generation is as prosperous as the America our parents gave us.  Infrastructure is the platform on which we build to make our lives, the lives of those who live in America, and even the lives of those who do not live here better.  As importantly, infrastructure is the often unseen subsidy that allows high earners and even some non-high earners to make life as comfortable as possible for themselves and their children.  That subsidy can be sensibly paid back by higher future taxes, to the extent that a superior infrastructure is a large subsidy for the incomes of future generations.

Simply put, many people who make large salaries in the future will do so because of the wonderful infrastructure that will be built on the back of today’s stimulus and today’s deficits.   Indeed, many people who make large salaries now do so because of the wonderful infrastructure that was built on the back of yesterday’s stimuli and deficits.  Of course, many will claim that this ignores uniquely talented individuals who made it all on their own.  Those many are simply wrong.  An example of the supremely talented individual who did not make it on his own would be a professional athlete who happens to work in a building that has been paid for by taxpayers.  That athlete may well be highly paid because of his talent.  However, the amount of his salary may depend in significant measure on the size of the subsithis-this.jpgdy that has been given to the athlete’s team through tax breaks or a publicly financed stadium or the infrastructure of the airwaves that allows for lucrative television contracts.   To be clear, Athlete A may get paid much more than Athlete B because of Athlete A’s talent.  However, without the infrastructure, Athlete A’s paycheck might be quite a bit lower.  This story can be played out in nearly every industry, from the trucking industry that relies on our interstate highway system to the direct mail industry that relies on the postal system to many others.   The story plays out in part because starting from scratch rarely requires that one create the infrastructure that leads to profits.  Rather, success often results from plugging into the infrastructure that helps one turn one’s skills into large salaries or profits.  The payment of higher taxes as a recognition that the infrastructure into which one is plugging is superior to the one that would be available without stimulus and infrastructure building that leads to large deficits is reasonable.

Claims that high deficits for today’s projects constitute generational theft are misguided.  If we want to tax ourselves to pay for infrastructure, we are giving future generations a large gift.  Gifting is fine, but the refusal to give a gift is not theft.  Though some may suggest that those who will have to pay for the infrastructure might prefer to keep their money and forgo the infrastructure, history suggests that when infrastructure is properly completed, the investment is worth the price.


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